Burger King Signals Marketing Shift

ERIK SCHELZIG

Published 8:00 pm, Monday, April 14, 2003

Associated Press Writer

Burger King Corp. fired the agencies that helped shape the company's advertising strategy during its ongoing price war with chief rival McDonald's Corp., signaling a marketing shift away from the deep discounts that have crippled industry profits.

The No. 2 burger chain said it has hired Young & Rubicam to oversee the bulk of its $340 million account, dropping Deutsch Inc., the agency responsible for advertising the company's 99-cent menus. Creative consultant Amoeba LLC was also dismissed.

The moves Monday came almost two months after Burger King's top marketing executive, Chris Clouser, said he would retire May 1.

The changes followed Burger King's sale by British liquor giant Diageo PLC to a consortium of U.S. investors who face the challenge of improving sagging profits.

Bradley D. Blum, who was named Burger King's new chief executive after the company changed owners in December, said in a telephone interview that the new marketing strategy would highlight quality, new products and service.

"Deeply discounting prices over the long term just doesn't make sense," he said.

Deutsch and Amoeba did not return calls late Monday seeking comment.

The reconfiguration of Burger King's advertising roster will be the company's seventh since 1989.

Miami-based Burger King and McDonald's, the No. 1 fast food company, have been slashing prices in an effort to attract customers in a highly saturated market. Business has eroded as consumers have opted for healthier diets.

With profits hurting, the burger giants are now deciding whether to continue battling each other on price, or readjust their strategies.

Both companies have new CEOs who have vowed to introduce healthier fare to their lineups while simplifying menus.

Jim Cantalupo, a former McDonald's president, came out of retirement Jan. 1 to rejoin the Oak Brook, Ill.-based company. He replaced Jack Greenberg, who took early retirement.

McDonald's, one of the world's biggest advertisers, has promised a new approach to marketing that will focus primarily on people with children and consumers aged 18-to-29. The company is interviewing several advertising agencies.

Burger King, which has 8,146 restaurants and an 18 percent market share, intensified the burger wars last September when it cut the price of 11 menu items to 99 cents. McDonald's, with 13,300 U.S. restaurants and a 43 percent market share, followed suit by offering eight items at 99 cents.

While Burger King would not say exactly when it would depart from its "deep-discounts," Blum said promotions to emphasize Burger King's open-fire cooking method would draw consumers' attention away from mere price.